Have you claimed your dividend yet? Here’s how to get a refund
Premium- Dividends that are not claimed by shareholders for more than seven years are transferred to the Investor Education and Protection Fund (IEPF)
One of the perks of owning shares of any company is the dividends—the profit or surplus that is distributed among shareholders. Dividends that are not claimed by shareholders for more than seven years are transferred to the Investor Education and Protection Fund (IEPF). This fund was set up by the government to promote awareness and protect the interest of investors.
“Earlier, dividend was paid by issuing cheques or warrants in the names of shareholders. In case of an incorrect address, the dividend wouldn’t have been credited to the shareholder. Even with the direct bank transfers, dividends may remain unclaimed if the shareholder’s bank account linked with the demat account is either closed or inactive or is not updated as per the core banking system," said Snehal Katrani - Group Head Compliance and Legal, Prabhudas Lilladher.
As the season of annual general meeting (AGM) of companies for FY22 kicks in, it’s time for shareholders to take notice of any unclaimed dividends.
Within 60 days of holding an AGM, companies update the list of investors who have not claimed dividend in the last seven years. The unpaid dividend details along with the shareholder’s last known address and due date on which such shares will be transferred to the IEPF are made available on the company’s website, according to Ajay Shaw, Partner, DSK Legal.
To get a refund, you need to write to the company or its registrar and transfer agent with supporting documents.
Refund from IEPF
Once shares are transferred to the IEPF account, they get debited from your demat account. If shares are held in physical form, they are deemed to be cancelled. Vinay Butani, parter, Economic Laws Practice, said “After shares are moved to the IEPF account, the voting rights on the shares shall be frozen and any further dividend on such shares shall be credited to the fund until claimed by the rightful owner."
For the unclaimed dividend and respective shares, you need to submit Form IEPF-5 online on the IEPF website. No timeline has been prescribed for claiming such refund, according to Atul Pandey, Partner, Khaitan & Co.
On successful submission, an acknowledgement will be generated indicating the SRN (service request number). Then, you need to submit an original copy of indemnity bond, copy of acknowledgement and IEPF-5 form along with other supporting KYC documents to the nodal officer appointed by the company.
After the application is verified and approved by the company, the refund will be released by the IEPF authority to your bank account. In case of any grievances, you can lodge a complaint with Sebi on SCOREs platform. However, it is mandatory to approach the intermediary or company first before complaining to Sebi, said Maneet Pal Singh, Partner, I.P. Pasricha & Co.